The Importance of Legal Portfolio Management

As one of the founders of Legal Project Management, I first developed the concept of legal project management for lawyers in 2014 as a part of my book Legal Project Management by LexisNexis. Despite client pressure and radical changes in the legal field, most law firms and legal departments still struggle to implement innovative Legal Project Management (LPM), Legal Process Improvement, and Portfolio Management practices in their daily job.

Also read:Legal Project Management 2022: Where Are We Now?

A decade after Legal Project Management started, here's a quick recap on where we’ve been and a look forward to where we are going…...

This article encourages lawyers, legal teams, and law firms of all shapes and sizes to understand how Legal Project Management and related disciplines like Legal Portfolio Management can fundamentally change how lawyers work. The legal profession literally demands these changes to boost its transformation and sustainability. It’s a change-or-die proposition!

As a leading global expert in legal innovation, I have been working with thousands of lawyers over the last decade to raise awareness and develop capabilities in Legal Project Management, Legal Portfolio Management, and Legal Process Improvement. These disciplines are all connected in the Legal Operations framework. However, big law firms and the Corporate Legal Operations Consortium (CLOC) differentiate these branches.

In another article in this series, I will share my thoughts on Legal Operations and emerging trends in this area.

The Сonception of Legal Portfolio Management

I had a light bulb moment in 2012 when I delivered a professional development seminar for the Australian Capital Territory Law Society. The topic was “Introduction to Legal Project Management”, and all the promotional materials were dedicated to this subject. I had a few experienced lawyers in the room who were becoming agitated and disruptive, so I paused and asked them if they had questions. Then, I realized that their specific challenges were more related to legal portfolio management rather than legal project management. So, I continued researching this content to include in my book about the differences. 

Looking back over the many Legal Project Management sessions I have had, I would say that the primary need is portfolio management for around 20% of the attendees. Some of these attendees are somewhat perplexed and disgruntled when they realize that Legal Project Management (LPM) is very different to Legal Project Portfolio Management (LPortM). 

So far, they have all remained at the sessions and have taken away the prior supporting ideas when they start using portfolio management across all their legal matters. Based on my professional experience, I can explain the difference between Legal Project Management and Legal Portfolio Management in the following way: 

In practice, the optimal approach for external firms is to apply legal portfolio management techniques across each practice area. For in-house legal teams, it is best to consider the entire suite of legal matters as a whole when allocating resources, undertaking prioritization, and assessing progress. It includes maintaining oversight of matters being undertaken by internal legal resources, as well as those allocated to external firms.

The Benefits of Legal Portfolio Management

The benefits of a portfolio management approach have long been recognized within traditional project management. Let me quote the following data in the recently published report by the Project Management Institute: 

Legal Portfolio Management (LPortM) provides the framework, tools and techniques that enable lawyers to—

1. Understand milestones across matters;
2. Juggle competing priorities and team members across matters;
3. Manage client expectations;
4. Deliver all commitments.

For individual lawyers

Individual lawyers and solo practitioners can enjoy such LPortM benefits as detecting major milestones across all client cases and evenly organizing the work effort according to client commitments. LPortM also supports the prevention of accidental overallocation and the slippage of delivery dates.

For law firms

LPortM provides substantial benefits to external firms, especially the large ones and large practices that need to juggle a suite of matters for different clients. Here is the list of big advantages that legal professionals can gain from LPortM:

1. Access to adequate legal resources to meet the delivery timeframes and major milestones for all legal matters;
2. Improved management of client expectations and accomplishment of client objectives;
3. Fulfilled portfolio-based reporting for major clients with significant legal matter cases;
4. Boosted workforce planning to predict future demand and hiring decisions;
5. Ensured utilization across practice areas and continuation of work when key resources are not available;
6. Reduced write-offs due to overlooking a deliverable that has gone over time or over budget.

For in-house legal teams

Legal Portfolio Management is likewise applicable to in-house teams and offers significant benefits for organizations by ensuring the availability of legal (and other) resources to meet the delivery timeframes and significant milestones for all legal projects or legal work streams of major projects. It also enables the identification of additional resourcing requirements that may be filled externally or temporarily.

Using Legal Portfolio Management’s disciplines and tools enables in-house legal teams to see ALL legal matters underway across the organization, including—

• Matters being undertaken solely by in-house team members and external counsel;
• Legal work streams as part of major organizational projects;
• Legal work outsourced to external counsel.

What Is Legal Portfolio Management?

The concept of Legal Portfolio Management (LPortM) plays a significant role in the efficient allocation of resources and moving priorities across a suite of legal matters.  

In legal project management, a portfolio is a collection of legal projects or related cases that will benefit from coordinated oversight. Grouping legal projects together and applying legal project management techniques contribute to the efficient and effective delivery of legal project outcomes. The key reason for managing legal projects as a part of a broader portfolio is that lawyers can achieve more than by managing their cases on their own.

Since legal matters generally introduce all the features of traditional projects, applying Legal Portfolio Management as a set of legal projects would result in more successful solutions for individual legal cases. Indeed, considering the low levels of understanding and capability with respect to legal project management, legal portfolio techniques will help lawyers improve their work on their matters more than traditional project management methods, which provide higher capability.

Legal Portfolio Management Capabilities

The key concepts of Legal Portfolio Management have been largely derived from traditional project management and adapted for better awareness of legal project management. 

The capabilities (skills, knowledge, tools, and techniques) required to design and deliver a portfolio of legal projects and legal matters are the following:

1. Portfolio Planning. It involves identifying all of the legal matters and legal projects required in the next planning period. Portfolio planning is recommended to be done annually to coincide with the organization’s or firm’s typical planning cycle. A portfolio plan sets the foundation that will need to be reviewed later and adjusted regularly in order to keep the focus on the overarching strategic objectives and priorities. A reasonable timeframe for the review process is quarterly and whenever a major shift in strategic priorities occurs for the organization or a major client. In-house legal teams need to ensure that they are represented on strategic management forums by senior legal staff—often the General Counsel or a Chief Legal Officer (to borrow terminology from the US). External counsel needs to contact their major clients to prioritize the current legal matters and forecast the likely future demand.
2. Portfolio Analysis and Reporting. It covers understanding the portfolio of legal matters and projects in detail to predict any issues with resourcing congestion, interdependencies, and potential milestone slippage in advance or resolve them once they emerge. This is a complex activity, especially for larger portfolios being delivered by larger teams of more than ten people. The complexity increases exponentially as team size, matter size, and matter volumes increase. Frequently, particular Portfolio Management legal expertise and more dedicated software support are needed.
3. Workforce Planning and Resource Allocation. This activity includes the allocation of resources across the portfolio of legal matters and projects. It is critical to understand the major milestones and delivery time frames for each matter so that sufficient resources can be allocated to ensure meeting all deadlines. This process often highlights resourcing gaps and also peak periods where additional resources may be required from outside or another practice area. Rely on a simple spreadsheet if you work in small teams of up to ten people.
4. Legal Project Management Methods. The frameworks, tools, and techniques of LPM are the foundation upon which Legal Portfolio Management can be built. When legal professionals are doing the current projects using good management techniques, portfolio management becomes easier to develop.
5. Practice Management. It is based on the management of the resources and legal matters within a specific practice area to maximize utilization and also deliver on client commitments within budgets and timeframes. Moving resources can be challenging. The main reasons are incompatible experience and skills and unpredictable activity levels largely driven by inadequate legal project management.
6. People Management. It focuses on the people’s side of performing legal work and needs to include activities such as performance management, career development, objective setting, leave management, and workplace health and safety considerations. An adaptive leadership style is recommended in order to obtain the best performance of both individuals and teams.
7. Stakeholder and Client Communication. It involves understanding the expectation of stakeholders and clients. Both parties can enjoy clear communication on the matter’s progress and any variations due to external factors. If resource allocation issues arising from Legal Portfolio Management affect the delivery of other matters, then attorneys need to resolve the issues and talk to clients to revise their expectations.

Different Priorities for External and In-House Counsel

Specific Applications for External Counsel

Legal Portfolio Management is critical for external specialists and practice teams that need to allocate team members across many matters with competing priorities and deadlines. It ensures clarity of all issues, milestones, and all resource allocation. By using these disciplines, large firms can provide balance and deliver on all client commitments without dropping any balls or getting into a mad panic when a small matter is neglected. Or when a looming delivery deadline prompts the need to pull all-nighters and work over the weekend.

Legal Project Management techniques support the effective application of Legal Portfolio Management for external firms on each of the individual matters within the portfolio. 

Specific Applications for In-House Counsel

The relationships between LPM, LPortM, and organizational strategy are essential to in-house legal teams as the efficient performance of legal projects and deliverables plays a critical role in the achievement of organizational outcomes. All organizations (large, medium, small, corporate, government, and not-for-profit) achieve their strategic objectives via project performance. Related concepts, such as program management and portfolio management, become more critical the larger an organization becomes.

The expectations and challenges for in-house legal teams are the following:

• Contribution to strategic planning and prioritization at the organizational level to ensure a balance between the legal activities and deliverables required to support the strategic direction.
• Understanding legal resource requirements to ensure sufficient internal legal resources and external legal resources are available when required.
• Becoming an informed purchaser of external legal services in order to manage the delivery of external legal work aligned to the organization’s requirements and timeframes.
• Developing Legal Project Management capabilities to deliver legal projects more effectively. Also, legal work streams should be integrated into larger organization programs that support the achievement of organizational objectives.
• Applying Legal Portfolio Management practices to ensure the efficient allocation of legal resources across all legal matters and legal projects.